Jump to content

Amazon Teaches Hachette and Authors Some Math

Victorious Secret

where-is-your-god-now-1.png

 

 

You know what? As much as Amazon is becoming large and ever involved in all industries, they have a very strong point. Amazon wants EVERYONE to earn more money AND give the consumer some savings. Thats like, the holy grail of any business but Hachette seems incapable of picking up what Amazon is putting down. 

 

I support such lessons in mathematics. Goes to show all those people who wondered why you'd ever need math in real life. Take that, suckers! 

 

 

 

 

 

 

 

Apparently Amazon's efforts earlier this month to make it abundantly clear that it's fight with Hachette is about helping, not harming authors still didn't quite make it through to authors who seem to reflexively hate Amazon (often for reasons that don't make much sense). So now Amazon has tried to be even more explicit, by taking the time to explain what price elasticity means, and how Amazon's plan would actually make authors more money. They lay it out pretty clearly, especially for those authors who maybe didn't do so well in economics classes:

 

 

 

A key objective is lower e-book prices. Many e-books are being released at $14.99 and even $19.99. That is unjustifiably high for an e-book. With an e-book, there's no printing, no over-printing, no need to forecast, no returns, no lost sales due to out-of-stock, no warehousing costs, no transportation costs, and there is no secondary market -- e-books cannot be resold as used books. E-books can be and should be less expensive. 

It's also important to understand that e-books are highly price-elastic. This means that when the price goes up, customers buy much less. We've quantified the price elasticity of e-books from repeated measurements across many titles. For every copy an e-book would sell at $14.99, it would sell 1.74 copies if priced at $9.99. So, for example, if customers would buy 100,000 copies of a particular e-book at $14.99, then customers would buy 174,000 copies of that same e-book at $9.99. Total revenue at $14.99 would be $1,499,000. Total revenue at $9.99 is $1,738,000. 

 

 

 

So, at $9.99, the total pie is bigger - how does Amazon propose to share that revenue pie? We believe 35% should go to the author, 35% to the publisher and 30% to Amazon. Is 30% reasonable? Yes. In fact, the 30% share of total revenue is what Hachette forced us to take in 2010 when they illegally colluded with their competitors to raise e-book prices. We had no problem with the 30% -- we did have a big problem with the price increases.

 

https://www.techdirt.com/articles/20140729/16470728046/amazon-to-hachette-authors-here-let-us-explain-basic-price-elasticity-to-you.shtml

Link to comment
Share on other sites

Link to post
Share on other sites

I'm with Amazon on this one thing. Prices on digital goods are overinflated for no reason. Just to nickel and dime people.

The stone cannot know why the chisel cleaves it; the iron cannot know why the fire scorches it. When thy life is cleft and scorched, when death and despair leap at thee, beat not thy breast and curse thy evil fate, but thank the Builder for the trials that shape thee.
Link to comment
Share on other sites

Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

×